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Chicago is a good place for the “people’s protest” Showdown in Chicago against the big banks… since it’s the heartland…  labor groups have organized this protest at the time of the American Bankers Association annual meeting…

There is a lot of anger in America about the financial crisis, the practices of the banks, the bailout that Congress gave the banks and the continued large profits and bonuses made by those on Wall Street… the video above is an Iowa farmer and member of the Iowa Citizens for Community Improvement as he rallies the crowd. (The Huffington Post is covering the protests..)

I think this is a clear indication of the feelings of Main Street for Wall Street….

Mean time in Washington the New York Times reports that Chairman Barney Frank is moving quickly to write legislation to resolve too-big-too-fail institutions… living wills will be required … and the administrations legislative proposal also calls for:

• Intervene prior to an institution’s insolvency;
• Provide many different types of financial support, including guarantees;
• Delay the settlement of swaps; and
• Exercise a generalized version of the resolution powers currently available to the FDIC when insured depository institutions fail.

In a foretaste of what new “liquidity” standards might look like Australian bankers are balking at a proposed requirement that they have greater amounts of “liquidity” on hand in case access to secured funding is removed (repo)… The Age reports…

~~~”… Some of Australia’s biggest banks have begun an intensive, behind-the-scenes campaign, arguing against an idea from the regulator that all banks have available cash on hand to fund 30 days of operations. The current level is five days.“~~~

And the Financial Times discusses new bank capital requirements that would create a “leverage ratio” and fix it around 25 times levered for institutions… (seems kinda high even with higher capital cushions). Also the aforementioned “liquidity” ration and additional capital for prop trading…  from the FT …

~~~ “In the future, the predominant form of tier one capital, which is the key measure of financial strength, is likely to be common shares and retained earnings, rather than hybrid capital, which is less able to absorb losses. The changes would create a “leverage ratio”, which will also take into account off-balance-sheet activities in order to limit the amount of borrowing conducted by institutions outside the formal banking regime. This would ensure that banks do not borrow too much money. Analysts expect it will put a ceiling on borrowings of about 25 times assets.

Further measures are also likely to include a minimum global standard for funding liquidity that includes a stressed liquidity coverage ratio requirement underpinned by a longer-term structural liquidity ratio.

Future regulations could also compel banks to hold additional capital if they trade with their own money, known as proprietary trading, which would further lower returns.“~~~

Now I wonder what Mr. Iowa Farmer would say about the proposal for banks to hold additional capital if they are government insured and trade derivatives and currencies and stocks and bonds for their own account? What say you? Do you think Mr. Iowa Farmer will abide such a change? Well…. stay tuned…